Insuring Easements and Access

A title insurance policy is a contact between the insured and the title insurer whereby the title insurer agrees to indemnify the insured for damages incurred due to a covered risk such as a lack of legal access. In the Conditions of both the Owner’s and Loan Policy Jackets at Section 8, the policies provide as follows:

“This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the Insured Claimant who has suffered loss or damage by reason of matters insured against by this policy.”

In Lawyers Title Insurance Co. v. Synergism One Corp., 572 So.2d 517, 518 (4th DCA 1990), the 4th DCA stated that: “A title policy indemnifies rather than guarantees the state of the insured title.”. In Village Carver Phase 1, LLC v. Fidelity Nat.Title Ins. Co., 128 So.3d 107, 111 (Fla. 3 DCA 2013), the 3d DCA stated:

“Title insurance policies are indemnity contracts against actual monetary loss resulting from specified causes, such as defects, liens and encumbrances existing on the date the insurance policy is issued.”

In CMEI, Inc. v. American Title Insurance Company, 447 So.2d 427, 428 (Fla. 5 DCA 1984), Judge Cowart stated that title policies are:

“[C]ontracts of indemnity, under which the insurer agrees to indemnify the insured up to a specific amount against loss or damage resulting from liens, encumbrances or title defects and claims within its coverages”.

Because a title policy is a contract of indemnity, the Insured will be indemnified i.e. compensated, for a loss incurred due to a title issue covered by the policy such as a lack of legal access.

B. Option to Pay

Since a title policy is a contract of indemnity, when a title claim is submitted to the title insurer, the title insurer has the option under Condition 7(b)(ii) to pay or settle the claim with the insured, or under 7(b)(i), to pay or settle the title claim with a third party alleging some interest in the property. Condition 7 of the policy provides:

7. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY

“In case of a claim under this policy, the Company shall have the following additional options:

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(b) To Pay or Otherwise Settle With Parties Other Than the Insured or With the Insured Claimant. (i) To pay or otherwise settle with other parties for or in the name of an Insured Claimant any claim insured against under this policy. In addition, the Company will pay any costs, attorneys’ fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment and that the Company is obligated to pay; or (ii) To pay or otherwise settle with the Insured Claimant the loss or damage provided for under this policy, together with any costs, attorneys’ fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment and that the Company is obligated to pay.”

Under the last sentence of Condition 7(b), the policy provides that the payment by the title insurer to indemnify the insured or to settle the title claim with a third party resolves the insurer’s obligations under the policy to the insured for that particular title claim:

“Upon the exercise by the Company of either of the options provided for in subsections [7] (b)(i) or (ii), the Company’s obligations to the Insured under this policy for the claimed loss or damage, other than the payments required to be made, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation.”

C. Option to Cure

While the title policy is a contract of indemnity obligating the title insurer to indemnify the insured for a covered loss, under Condition 5(b) of the title policy, the title insurer has the option to cure the title defect including a lack of legal access by any method including litigation. Condition 5(b) of the Owner’s and Loan policies provides:

“The Company shall have the right, in addition to the options contained in Section 7 of these Conditions, at its own cost, to institute and prosecute any action or proceeding or to do any other act that in its opinion may be necessary or desirable to establish the Title, as insured, or to prevent or reduce loss or damage to the Insured.”

Additionally, Condition 9(a) of the Owner’s and Loan policies provides that if the title defect or lack of legal access is cured in a reasonably diligent manner, the title insurer will have performed its obligations under the title policy. Condition 9(a) provides:

“(a) If the Company establishes the Title, or removes the alleged defect, lien, or encumbrance, or cures the lack of a right of access to or from the Land, or cures the claim of Unmarketable Title, all as insured, in a reasonably diligent manner by any method, including litigation and the completion of any appeals, it shall have fully performed its obligations with respect to that matter and shall not be liable for any loss or damage caused to the Insured.”

D. Third Option

There is a Third Option available to a title insurer to fulfill its obligations to an Insured under a title insurance policy. Under Condition 7(a) of the policy, a title insurer may pay the entire policy limit to the insured; and thereby, terminate all liability and obligations of the title insurer to its insured under the title policy. The “Third Option” is only utilized when the amount of the title policy is small. For example, if a claim is going to cost the title insurer $10,000 to obtain legal access for the insured property but the amount of the title policy is only $5,000, the title insurer would probably exercise the third option and tender the entire policy limit to the insured and terminate all liability under the policy. Condition 7(a) of the policy provides:

“In case of a claim under this policy, the Company shall have the following additional options:

(a) To Pay or Tender Payment of the Amount of Insurance. To pay or tender payment of the Amount of Insurance under this policy together with any costs, attorneys’ fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment or tender of payment and that the Company is obligated to pay. Upon the exercise by the Company of this option, all liability and obligations of the Company to the Insured under this policy, other than to make the payment required in this subsection, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation.”

II. POLICY COVERAGE

A Title Insurance Policy consists of a Jacket, Schedule A, Schedule B-1, and Endorsements. Loan Policies also have a Schedule B-2 for subordinate matters. These materials only discuss the policy jacket which contains the coverages, the conditions, and the exclusions from coverage.

A. Policy Jacket

The current version of the title insurance jacket in use in Florida for both the Owner’s Policy and the Loan Policy is the American Land Title Association (“ALTA”) 6-17-06 Jacket with Florida Modifications.

B. Covered Risks

At the top of the first page of the policy jacket labeled “COVERED RISKS”, the policy provides:

“SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS, WFG NATIONAL TITLE INSURANCE COMPANY, a South Carolina corporation (the “Company”) insures, as of Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of:”

After the forgoing, the owner’s policy jacket lists ten title issues that are insured by the policy (fourteen in the loan policy) which are titled “Covered Risks”.

C. Covered Risk #4

Subject to the exclusions, the exceptions, and the conditions contained in the policy jacket, the Covered Risks set forth the title issues insured by the policy. Covered Risk #4 covers access and insures against loss or damage incurred by the Insured by reason of:

“4. No right of access to and from the Land.”

Covered Risk #4 is phrased in the negative in that it does not insure that there is access to the property but instead insures against loss or damage incurred by the insured in the event that there is no right of access to the property. The coverage is phrased that way because the policy is a contract of indemnity rather than a guarantee or warranty of access. Throughout these materials, I will be using the phrase “insures access” even though Covered Risk #4 of the policy only insures against loss or damage in the event that the property does not have a right of access.

D. Legal Access

Covered Risk #4 insures a “right of access” to the property which is legal access or a “legal right of access”. Magna Enterprises, Inc. v. Fidelity Natl Title, 104 Cal.App.4th 122 (Cal. 4th DCA 2002). A title insurance policy does not insure that there is physical access to the property, or that the physical access is easy. See Title & Trust Co. v. Barrows, 381 So.2d 1088 (Fla. 1st DCA 1979); Krause v. Title & Trust Co., 390 So.2d 805 (Fla. 5th DCA 1980); Magna Enterprises, Inc. v. Fidelity Natl Title, 104 Cal.App 4th 122 (Cal. 4th DCA 2002); 43 Park Owners Group v. Commonwealth Land Title Ins. Co., 121 A.D.3d 937 (N.Y. 2014); Fidelity Natl Title v. Woody Creek Ventures, 830 F.3d 1209 (U.S. 10th Cir. 2016); Gates v. Chicago Title Ins. Co., 813 S.W.2d 10 (Missouri Western Dist. 1991).

Regarding legal access and the quality of physical access, the court in Magna Enterprises, Inc. v. Fidelity Natl Title, 104 Cal.App.4th 122 at 125, stated: “coverage for a lack of right of access to the insured property is not triggered where [physical] access is merely impractical or difficult as long as the right to access exists.” In Krause v. Title & Trust, 390 So.2d 805, at 806, a right of access existed even though the route for that legal access was over a road that was not passable in a normal passenger vehicle without substantial clay or rock fill. In Title & Trust v. Barrows, 381 So.2d 1088, at 1090, legal access via a platted road which road was merely a continuation of a sandy beach that was covered by high tide during spring and fall constituted a right of access. In Magna Enterprises, Inc. v. Fidelity Natl Title, 104 Cal.App.4th 122, legal access for a repair shop owned by Magna was through a shopping center adjacent to the repair shop which was also owned by Magna. That access constituted legal access even though the physical access through the shopping center parcel was difficult or impossible due to the shopping center parking lot being 2.5 feet higher than the parking lot for the repair shop.

Alternatively, a road may exist that provides physical access to the property and yet the property may not have a right of access if there is no legal basis for the road to exist. There must be a legal basis for the creation of the road for that road to provide legal of access.

Unless the title policy insures a separate access easement, the policy does not insure any particular route of access. Therefore, as long as there is legal access to the property by any route, the title insurer’s obligations under Covered Risk #4 of the policy are fulfilled.

III. TYPES OF ACCESS

A. Platted Streets

Under Florida Statute 177.085(3), all streets, alleys and easements shown on a plat are dedicated to the public unless stated otherwise in the plat. Even if the streets shown on a plat are private streets, owners of lots in the subdivision have the right to use those platted streets. Therefore, as long as the platted streets lead to a public road, those streets provide legal access to the property and fulfill a title insurer’s obligations under Covered Risk #4 insuring a right of access. Title insurers do not specifically insure platted roads even though lenders sometimes make that request.

B. Easements

Anytime a property is not a platted lot or a condominium unit, legal access should be questioned and verified. An access easement should be obtained if a title search reveals that the property does not have legal access.

1. Created in Deed

If a seller is conveying a parcel of landlocked property to a buyer together with an easement over other property owned by the seller to provide legal access, the seller can create that easement in the deed conveying the landlocked parcel to the buyer. For example, if the seller owns Parcels A and B, and Parcel A is being conveyed together with an easement over the west 25 feet of Parcel B for access, the easement over Parcel B can be created in the conveyance of Parcel A with the following language:

“Parcel A . . . together with a perpetual non-exclusive easement for access over the west 25 feet of Parcel B that runs with the land for the benefit of the grantee [Buyer], his/her successors and assigns”.

2. Separate Document

The easement in the foregoing example does not have to be created in the deed conveying Parcel A, the easement may also be created in a separate Easement Agreement executed by the seller. If the seller of Parcel A does not also own Parcel B, then a separate Easement Agreement would have to be obtained from the owner of Parcel B to provide access for Parcel A.

If requested by the a buyer, the easement described in subparagraphs IV.B (1) and (2) can be insured as an additional insured Parcel in the policy. Two parcels would be insured: (1) Parcel A as to a fee interest vested in the insured buyer; and (2) the easement over the West 25 feet of Parcel B. Even though the easement would be insured by the title policy, the policy would contain an exception for the terms of the easement whether the easement was created in a deed or by a separate instrument.

3. Reserve an Easement

If the foregoing Example is changed so that the owner of Parcels A and B is selling Parcel B instead of Parcel A. Since Parcel A, in this example, is landlocked and needs an easement over Parcel B for access, when Parcel B is conveyed to the buyer, the seller will need to reserve an easement over Parcel B for the benefit of Parcel A in the deed conveying Parcel B to the buyer. The language to reserve the easement would be:

“Subject to a perpetual non-exclusive easement for access reserved in favor of the grantor, his/her successors and assigns, over the west 25 feet of Parcel B for the benefit of Parcel A to run with the land.”

In this example, a title insurance policy insuring Parcel B would contain an exception for the easement reserved in the deed because Parcel B would be burdened by that easement.

C. Municipality, County, and State Maintained Roads

If a property is adjacent to a physical road but a search of the Public Records does not reveal a legal basis for the road to exist i.e. no dedication, no conveyance, no easement, or no creation in a declaration of covenants, conditions and restrictions, the property might still have legal access under Florida Statute 95.361.

1. Constructed by County, Municipality, or DOT

Under F.S. 95.361(1), if the County, Municipality, or the Department of Transportation constructed a road and maintained or repaired that road continuously and uninterruptedly for 4 years, the road is deemed dedicated to the public to the extent of the width maintained. And, title to the road vests in the County if the road is a county road; in the municipality if the road is a municipal street; or in the State of Florida if the road is in the State Highway System or the State Park Road System.

2. Maintained by County, Municipality, or DOT

Under F.S. 95.361(2), if the County, Municipality, or the Department of Transportation did not construct the road but has maintained or repaired the road continuously and uninterruptedly for 7 years, the road is deemed dedicated to the public to the extent of the width maintained. And, as with F.S. 95.361(1), title to the road vests in the County, the Municipality,

or the State of Florida depending upon whether the road is a County, Municipal, or State road.

D. Other Types of Access

1. Ways of Necessity

2. Prescriptive Easements

The foregoing types of access will be explained in another Section of these materials by another author. However, from a title insurance standpoint, a title insurer will not rely on these types of access until a court has entered a final judgment against the pertinent parties establishing access using the foregoing as a legal basis for that access.

IV. EASEMENT ISSUES

A. “Subject To

The words “subject to” are insufficient in and of themselves to create an easement. “Subject to” language has been held to be words of qualification of the estate being conveyed rather than words of contract to create an easement. Procacci v. Zacco, 324 So.2d 180 (Fla. 4 DCA 1975), Robertia v. Pine Tree Water Control Dist., 516 So.2d 1012 (Fla. 4 DCA 1987). The Procacci court, 324 So.2d 180, 182, held that the following clause in a deed from an estate to Phillips Petroleum did not create an easement:

“Subject to an easement for road right-of-way over the South 25 feet of the North 235 feet above the described land”

The 4th DCA in Procacci stated:

“At best the use of the words ‘subject to’ in an attempt to create an easement leads to unclear and ambiguous results, [citation omitted]. To understand the intentions of the parties (which should be understandable when reading the instrument), recourse must be had to the surrounding agreements and circumstances. Without such facts and circumstances, no easement is created when the words ‘subject to’ are used.” Id. at 182.

The words “subject to” in a deed create an ambiguity that allows a court to hear extrinsic evidence to ascertain the intent of the parties at the time the “subject to” deed was executed. Hastie v. Ekholm, 199 So.3d 461 (Fla. 4 DCA 2016). In in Hastie v. Ekholm, several lots in an unrecorded plat were conveyed by a common grantor with the following language:

“SUBJECT TO an easement for road purposes over the East 30.0 feet.”

The east 30 feet of those lots became a road known as Clark Lane. The 4th DCA in Hastie stated that since the deeds were ambiguous the trial court was “correct in looking at the circumstances surrounding the common grantor’s original conveyance of the lots on Clark Lane” to determine the intent of the grantor. Id at 464. The Hastie Court, held that “[t]he deeds in this case demonstrated that the common grantors intended that [a] private road run up and down the east side of the lots on Clark Lane.” Id. at 464.

In Behm v. Saeli, 560 So.2d 431 (Fla. 5 DCA 1990), a conveyance of 10 acres contained the following clause:

“SUBJECT to a 30 foot wide Ingress and Egress Easement along the East line”.

That clause was determined by the trial court to not create an easement. However, the 5th DCA reversed the trial court and held that based upon all of the evidence of the circumstances of the agreement between the original parties, the parties to the deed intended to create an easement with the “subject to” language. Id. at 432.

Generally, the title industry will not rely on easements attempted to be created using “subject to” language unless there is a final judgment affirming that the easement was validly created.

B. Language to Create Easement

1. Reserving an Easement

When a seller is conveying property to a buyer and is reserving an easement over the property being conveyed for the benefit of other property owned and retained by the seller, the language to reserve that easement over Lot 1 for the benefit of Lot 2, is:

“Lot 1 . . . subject to a perpetual non-exclusive easement for access over the East 30 feet of Lot 1 reserved in favor of the grantor, his/her successors and assigns, for the benefit of Lot 2 and which runs with land.”

2. Conveying an Easement

When a seller is conveying a lot to a buyer together with an easement over other property owned by the seller, the language to create the easement when, for example, Lot 1 is being conveyed by the seller together with an easement over Lot 2 owned by the seller, is:

“Lot 1 . . . together with a perpetual non-exclusive easement for access over the East 30

feet of Lot 2 for the benefit of Lot 1 and for the benefit of the grantee, his/her successors and assigns, that runs with the land.”

C. Appurtenant Easements

Access based on an easement that was created in the back chain of title when the easement has not been referenced in deeds conveying the dominant parcel after the easement was created can be insured if the easement is an appurtenant easement. “[A]n appurtenant easement is a permanent easement running with the land and passes incident to it.” Morris v. Winbar LLC, 273 So.3d 176 (Fla. 1 DCA 2019). The dominant estate receives the benefit of an easement and the servient estate is burdened by the easement. Id. When an easement is appurtenant, it stays with the dominant estate and travels with a conveyance of the dominant estate whether the easement is specifically referenced in the deed or not. Therefore, an appurtenant easement created in the back chain of title can be relied upon to insure access whether or not the easement is referenced in conveyances of the dominant estate after the easement was created.

V. EXCEPTIONS FOR EASEMENTS

A. Burdened Property

A title insurance policy will always make exceptions for the terms of easements that burden the insured property because the easement affects the fee owner’s full use of the property.

B. Benefited Property

A title insurance policy will also make exceptions for the terms of easements that benefit the insured property because the use of that easement is limited by the terms of the easement such as width, length, duration, quantity of use, or time of use.

C. Matters on Survey

Any roads, paths, trails or power lines shown on a survey as traversing the insured property will be listed as exceptions in the title policy because they affect the insured owner’s use of the property. If there are no recorded documents creating the road, path, trail, or power line, the policy will contain the following exception: “Possible prescriptive easement for the [road, path, trail or power line] shown on the survey prepared by John Smith Surveying dated ______________, Job No.: __________.”

VI. INSURING EASEMENTS CONTAINED IN EXCEPTIONS

In commercial transactions, lender’s counsel and buyer’s counsel occasionally request

that certain easements contained in the exceptions listed in the title commitment be insured, such as reciprocal parking easements or joint entrance easements. These non-exclusive easements can usually be insured as an additional parcel in the policy with the following or similar language:

“Non-exclusive reciprocal parking Easement Agreement recorded in Official Records Book 1234 Page 567 Public Records of Orange County, Florida.”

Even though the easement is insured, the policy will contain an exception for the terms of the easement because the use of the easement is limited by its terms.